In the new issue of Regulation, economist Pierre Lemieux argues that the recent oil price decline is at least partly the result of increased supply from the extraction of shale oil. The increased supply allows the economy to produce more goods, which benefits some people, if not all of them. Thus, contrary to some commentary in the press, cheaper oil prices cannot harm the economy as a whole.

Two long wars, chronic deficits, the financial crisis, the costly drug war, the growth of executive power under Presidents Bush and Obama, and the revelations about NSA abuses, have given rise to a growing libertarian movement in our country – with a greater focus on individual liberty and less government power. David Boaz’s newly released The Libertarian Mind is a comprehensive guide to the history, philosophy, and growth of the libertarian movement, with incisive analyses of today’s most pressing issues and policies.

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Thomas Jefferson was an advocate of public schooling, after a fashion. He knew that an educated public was the only protection against government abuses, and he assumed that a state-run, state-funded school system would provide that essential education. If he could only see public schooling today.

The Arizona-based Goldwater Institute has just released a study on the civics knowledge of that state’s high school students. Matt Ladner, Goldwater’s head of research, administered the same trivial test that’s given to immigrants applying for citizenship, using the same trivial pass/fail threshold. [I know it’s trivial, ‘cause I took it a few years ago.] The results of Goldwater’s little experiment… Oh. My. God. Becky:

Honestly, why did anyone – especially Thomas Jefferson – ever imagine that a government monopoly would be a good way to educate kids about a democratic republic and protect them from abuses of government power?

[T]he effect of it would be that state, and maybe federal funds, would be used for the expressed [sic] purpose of teaching Catholic dogma. My opposition to that has nothing to do with my status as an Episcopalian - I don’t want All Saints Episcopalian Day School in Hoboken to get state funds to teach Episcopalian dogma

There is merit to his concern. Many of this nation’s early immigrants had fled compelled support for religion and other infrigements on their freedom of belief in their mother countries. But there is a way to avoid these problems while simultaneously ensuring educational freedom and choice for all: education tax credits.

These programs cut taxes on families who cover the cost of their own children’s education, and on individuals and businesses who donate to non-profit scholarship funds for lower-income students. If you choose to participate, you also choose the institution that gets your money – either the school you send your own children to or the scholarship orgnization that receives your contribution. In the latter case, you simply pick the scholarship fund you think is doing the best job helping low-income families.

If you don’t want to fund a religious education for Catholics or Muslims, you don’t have to. You can choose a secular scholarship fund or one serving Episcopalians, Jews or Hindus. For those not particularly sensitive to the religiosity of other families’ schooling, there are scholarship funds that make no religious distinctions at all.

This is a way to unite like-minded donors and parents without the use of compulsion, and without inhibiting the very freedom and clear sense of mission that are the entire raison-d’etre of school choice. It is also in the best spirit of individual liberty and cooperation among free people that we will be celebrating early next month…

Rep. Zoe Lofgren (D-CA) is very upset that the Obama administration has rejected the California state government’s request for a bailout. She tells the Washington Post:

This matters for the U.S., not just for California. I can’t speak for the president, but when you’ve got the 8th biggest economy in the world sitting as one of your 50 states, it’s hard to see how the country recovers if that state does not.

First, presumably Lofgren knows that the federal government is projecting a deficit of $1.8 trillion for the current fiscal year – so where is this emergency aid for California to come from?

But perhaps even more importantly, Lofgren seems to confuse the state of California with the State of California. That is, she confuses the people and the businesses of California with the state government. There’s no clear and direct relationship between the two. The state government is currently running a large deficit and is warning of a “fiscal meltdown.” Of course, as it continued to issue claims of fiscal meltdown and painful cuts over the past many years, California has continued to spend. The state has nearly tripled spending since 1990 (doubled in per capita terms). It went on a spending binge during the dotcom boom and never adjusted to the lower revenues after the bust. During the Schwarzenegger years the state has increased spending twice as fast as inflation and population growth. What were they thinking?

But a bailout for the government won’t necessarily help the recovery of the state’s economy. In fact, by increasing taxes and/or borrowing, it would likely weaken the national economy. And by encouraging continued irresponsible spending by the state government, it would just be an enabler of destructive policies that suck money out of the productive sector of California’s economy. We all want the California economy to recover. But that’s not the same thing as giving more money to the California government.

Randolph Bourne warned us nearly a century ago that “war is the health of the state.” There may be no better present evidence of the danger of promiscuous war-making comes than a new article by columnist Ralph Peters. Faced with the inevitable horror of war, he says embrace the horror rather than forgo the war.

While the essence of warfare never changes—it will always be about killing the enemy until he acquiesces in our desires or is exterminated—its topical manifestations evolve and its dimensions expand. Today, the United States and its allies will never face a lone enemy on the battlefield. There will always be a hostile third party in the fight, but one which we not only refrain from attacking but are hesitant to annoy: the media.

While this brief essay cannot undertake to analyze the psychological dysfunctions that lead many among the most privileged Westerners to attack their own civilization and those who defend it, we can acknowledge the overwhelming evidence that, to most media practitioners, our troops are always guilty (even if proven innocent), while our barbaric enemies are innocent (even if proven guilty). The phenomenon of Western and world journalists championing the “rights” and causes of blood-drenched butchers who, given the opportunity, would torture and slaughter them, disproves the notion—were any additional proof required—that human beings are rational creatures. Indeed, the passionate belief of so much of the intelligentsia that our civilization is evil and only the savage is noble looks rather like an anemic version of the self-delusions of the terrorists themselves. And, of course, there is a penalty for the intellectual’s dismissal of religion: humans need to believe in something greater than themselves, even if they have a degree from Harvard. Rejecting the god of their fathers, the neo-pagans who dominate the media serve as lackeys at the terrorists’ bloody altar.

Of course, the media have shaped the outcome of conflicts for centuries, from the European wars of religion through Vietnam. More recently, though, the media have determined the outcomes of conflicts. While journalists and editors ultimately failed to defeat the U.S. government in Iraq, video cameras and biased reporting guaranteed that Hezbollah would survive the 2006 war with Israel and, as of this writing, they appear to have saved Hamas from destruction in Gaza.

Pretending to be impartial, the self-segregating personalities drawn to media careers overwhelmingly take a side, and that side is rarely ours. Although it seems unthinkable now, future wars may require censorship, news blackouts and, ultimately, military attacks on the partisan media. Perceiving themselves as superior beings, journalists have positioned themselves as protected-species combatants. But freedom of the press stops when its abuse kills our soldiers and strengthens our enemies. Such a view arouses disdain today, but a media establishment that has forgotten any sense of sober patriotism may find that it has become tomorrow’s conventional wisdom.

Sometimes war will be inevitable, but America’s many economic, geographic, and political advantages allow us to more easily avoid it. The cost to our people, foreign peoples, and our domestic freedoms are all good reasons to treat war as the last resort rather than the first tool of choice by Washington policymakers.

In Cairo on Thursday, President Obama asked for a “new beginning between the United States and Muslims around the world,” and spoke at some length on the Israeli-Palestinian conflict, Iran, Iraq, and Afghanistan. Cato scholar Christopher Preble comments, “At times, it sounded like a state of the union address, with a litany of promises intended to appeal to particular interest groups. …That said, I thought the president hit the essential points without overpromising.”

He did not ignore that which divides the United States from the world at large, and many Muslims in particular, nor was he afraid to address squarely the lies and distortions — including the implication that 9/11 never happened, or was not the product of al Qaeda — that have made the situation worse than it should be. He stressed the common interests that should draw people to support U.S. policies rather than oppose them: these include our opposition to the use of violence against innocents; our support for democracy and self-government; and our hostility toward racial, ethnic or religious intolerance. All good.

Americans forget that the Muslim world and the Arab world are not synonymous. In fact, only 15 to 20 percent of Muslims live in Arab countries, barely more than the number in Indonesia alone and far fewer than the number in the Indian subcontinent. It seems to me that Obama would be better off delivering his message to the Muslim world somewhere closer to where most Muslims live. Perhaps even in his own childhood home of Indonesia.

Not only are there more Muslims in Asia than in the Middle East, the Muslim countries of south and southeast Asia have done a better job of integrating Islam and modern democratic capitalism…. Egypt is a fine place for a speech on the Arab-Israeli conflict. But in Indonesia, Malaysia, India, or Pakistan he could give a speech on America and the Muslim world surrounded by rival political leaders in a democratic country and by internationally recognized business leaders. It would be good for the president to draw attention to this more moderate version of Islam.

Tiananmen Square: 20 Years Later

It has been 20 years since the tragic deaths of pro-democracy protesters in Tiananmen Square in June 1989, and 30 years since Deng Xiaoping embarked on economic reform in China. Cato scholar James A. Dorn comments, “After 20 years China has made substantial economic progress, but the ghosts of Tiananmen are restless and will continue to be so until the Goddess of Liberty is restored.”

In Thursday’s Cato Daily Podcast, Dorn discusses the perception of human rights in China since the Tiananmen Square massacre, saying that many young people are beginning to accept the existence of human rights independent of the state.

A few days before the anniversary, social media Web sites like Twitter and YouTube were blocked in China. Cato scholar Jim Harper says that it’s going to take a lot more than tanks to shut down the message of freedom in today’s online world:

In 1989, when a nascent pro-democracy movement wanted to communicate its vitality and prepare to take on the state, meeting en masse was vital. But that made it fairly easy for the CCP to roll in and crush the dream of democracy.

Twenty years later, the Internet is the place where mass movements for liberty can take root. While the CCP is attempting to use the electronic equivalent of an armored division to prevent change, reform today is a question of when, not if. Shutting down open dialogue will only slow the democratic transition to freedom, which the Chinese government cannot ultimately prevent.

Taxpayers Acquire Failing Auto Company

After billions of dollars were spent over the course of two presidential administrations to keep General Motors afloat, the American car company filed for bankruptcy this week anyway.

In November, GM turned to the federal government for a bailout loan — the one final alternative to bankruptcy. After a lot of discussion and some rich debate, Congress voted against a bailout, seemingly foreclosing all options except bankruptcy. But before GM could avail itself of bankruptcy protection, President Bush took the fateful decision of circumventing Congress and diverting $15.4 billion from Troubled Asset Relief Program funds to GM (in the chummy spirit of avoiding tough news around the holidays).

That was the original sin. George W. Bush is very much complicit in the nationalization of GM and the cascade of similar interventions that may follow. Had Bush not funded GM in December (under questionable authority, no less), the company probably would have filed for bankruptcy on Jan. 1, at which point prospective buyers, both foreign and domestic, would have surfaced and made bids for spin-off assets or equity stakes in the “New GM,” just as is happening now.

Meanwhile, the government takeover of GM puts the fate of Ford Motors, a company that didn’t take any bailout money, into question:

Thus, what’s going to happen to Ford? With the public aware that the administration will go to bat for GM, who will want to own Ford stock? Who will lend Ford money (particularly in light of the way GM’s and Chrysler’s bondholders were treated). Who wants to compete against an entity backed by an unrestrained national treasury?

Ultimately, if I’m a member of Ford management or a large shareholder, I’m thinking that my biggest competitors, who’ve made terrible business decisions over the years, just got their debts erased and their downsides covered. Thus, even if my balance sheet is healthy enough to go it alone, why bother? And that calculation presents the specter of another taxpayer bailout to the tunes of tens of billions of dollars, and another government-run auto company.

Ohio lawmakers are hot under the collar about federal stimulus dollars possibly helping Georgia bid away one of its big employers. Here’s the Dayton Daily News:

NCR’s news release touting its decision to move jobs from Dayton to the Atlanta, Ga. suburbs includes one factoid that has Ohio lawmakers in a fury: The City of Columbus, Ga. plans to use federal stimulus dollars to buy a building and construct another to accommodate the 870 manufacturing jobs expected to come to the that Atlanta suburb. ‘The fact that economic stimulus dollars were used to move an Ohio company to Georgia at taxpayer expense is an outrage,’ said state Sen. Jon Husted.

Added U.S. Rep. Pat Tiberi, R-Columbus: “Federal stimulus money is being used to create winners and losers among workers in different states and that’s just not right; it’s dirty.”

All I can say to both parties is that’s what you get for building an imperial city on the Potomac and spending the last few decades destroying the constitutional principle of federalism. As I’ve described in this study, regional warfare over federal subsidies has escalated in recent years. It’s horribly wasteful, and it’s getting worse.

There’s an old Yiddish saying that, “If my bubba had wheels she’d be a trolley.” So goes the logic of the Obama administration in their paper released yesterday, “The Economic Case for Health Care Reform.” Their claim is that reducing health care costs would help the economy. Yes, if health care costs were reduced it would likely help the economy, though we should remember that the health care industry is part of the economy.

There is nothing in Obamacare, however, that will reduce costs. In fact, expanding coverage may cause costs to rise. One study by MIT’s Amy Finkelstein suggests that the prevalence of insurance itself has roughly doubled the cost of health care. So, if Obama succeeds in expanding insurance coverage, it’s very likely to increase the cost of care.

Take Massachusetts for example. Three years ago, Massachusetts governor Mitt Romney signed into law one of the most far-reaching experiments in health care reform since President Bill Clinton’s ill-fated attempt at national health care. Proponents promised the reforms would reduce health care costs, suggesting the price of individual insurance policies would be reduced by 25-40 percent. In reality, however, insurance premiums rose by 7.4 percent in 2007, 8-12 percent in 2008, and are expected to rise 9 percent this year. This is compared to a nationwide average increase of 5.7 percent over the same three years. Nationally, on average, health insurance for a family of four costs $12,700; in Massachusetts, coverage for the same family costs an average of $16,897.

In fact, since the bill was signed, health care spending in the state has increased by 23 percent. Thus, despite individual and employer mandates, the creation of an insurance connector and other measures that increase insurance regulations, Massachusetts has failed to bring costs down.

Ultimately, controlling costs requires someone to say “no,” whether the government (as in single-payer systems with global budgets), insurers (managed care) or health care consumers themselves (by desire or ability to pay). In reality, any health care reform will have to confront the fact that the biggest single reason costs keep rising is that the American people keep buying more and more health care.